U.S. Venture, Inc. v. Commonwealth

• Citation: 255 A.3d 321
• Decision Date: 21 July 2021
• Docket Number: No. 51 MAP 2020,51 MAP 2020
• Parties: U.S. VENTURE, INC., Appellant v. COMMONWEALTH of Pennsylvania, Department of Community and Economic Development; Commonwealth Financing Agency; and Scott D. Dunkelburger, Executive Director of the Commonwealth Financing Agency, Appellees
• Court: United States State Supreme Court of Pennsylvania

255 A.3d 321

U.S. VENTURE, INC., Appellant

v.COMMONWEALTH of Pennsylvania, Department of Community and Economic Development; Commonwealth Financing Agency; and Scott D. Dunkelburger, Executive Director of the Commonwealth Financing Agency, Appellees

No. 51 MAP 2020

Supreme Court of Pennsylvania.

Argued: March 10, 2021

Decided: July 21, 2021

Todd Robert Brown, Esq., Michael F. Nerone, Esq., Pittsburgh, John Thomas Pion, Esq., Pion, Nerone, Girman, Winslow & Smith, P.C., Pittsburgh, for U.S. Venture, Inc.

J. Michael Adams Jr., Esq., Pennsylvania Department of Community & Economic Development, Harrisburg, for Appellees Department of Community and Economic Development, Scott D. Dunkelburger, Commonwealth Financing Agency

BAER, C.J., SAYLOR, TODD, DONOHUE, DOUGHERTY, WECHT, MUNDY, JJ.

OPINION

JUSTICE DONOHUE

U.S. Venture, Inc. ("Venture") appeals from the decision of the Commonwealth Court affirming the determination of the Pennsylvania Board of Claims ("Board") that its dispute with the Commonwealth¹ involving two grant agreements was not within the subject matter jurisdiction of the Board and that its claim was barred by sovereign immunity. For the reasons set forth herein, we find that any ambiguity within the relevant statutory provisions must be resolved in favor of preserving sovereign immunity. Alternatively, we find that these written grant agreements were in fact "grants," which are not subject to the limited waiver of sovereign immunity and affirm.

I. Factual and Procedural History

Within the Alternative Energy Investment Act, 73 P.S. §§ 1649.101 – 1649.2901, the General Assembly authorized the CFA, with administrative support from the DCED, to, inter alia, provide "grants to businesses or nonprofit economic development organizations for alternative energy production projects." 73 P.S. § 1649.307(a)(1)(iii). Pursuant to this authority, the Commonwealth created the Alternative and Clean Energy ("ACE") program, which was designed to "provide[ ] financial assistance in the form of grant and loan funds that will be used by eligible applicants for the utilization, development and construction of alternative and clean energy projects in the Commonwealth." Alternative and Clean Energy Program Guidelines at 3 (unpaginated); R.R. 343a.² Applicants applied for funds through a website. Deposition of Ryan Emerson, 8/9/2018, at 14; R.R. 248a.³

In May 2014, Venture, a Wisconsin corporation, applied for two separate ACE grants through the website. Both applications proposed adding compressed natural gas ("CNG") fuel pumps to existing fueling stations. The forms submitted by Venture through the website indicated that the first project concerned an existing fueling station in Fredericksburg, Pennsylvania. Responding to the form question, "What do you plan to accomplish with this project?" Venture stated that the "[Environmental Protection Agency] estimates that replacing diesel vehicles with CNG vehicles" would significantly reduce harmful emissions and that "[b]efore fleets will feel confident in converting to CNG, however, a reliable nationwide refueling infrastructure must be in place." R.R. 69a. Venture noted that GAIN Clean Fuel, a division of Venture, "has partnered with Pacific Pride Services ... to provide two fast-fill dispensers with two pumps each to dispense CNG at Pacific Pride's existing station" in Fredericksburg. This station "is located along ... a major east-west transportation route" and "will play a vital role in allowing [e]ast-coast fleets to convert to CNG." Id . Venture stated that GAIN Clean Fuel "has entered into an agreement with ... a nationwide freight transportation company" that required said company to "purchase an average of 118,000 [diesel gallon equivalent] / year from the Fredericksburg station, thus guaranteeing the reduction" of various harmful emissions. Id . Venture sought $643,489 in funds, which would cover 40% of the total project costs.

The second application likewise involved an existing fueling station. Venture's application stated that "GAIN ... has partnered with Silvi Concrete ... to build a high-speed public fueling station with private slow-fill lanes for Silvi's new fleet of CNG-fueled concrete mixers." R.R. 108a. Additionally, a new "public fast-fill portion" would be open to all travelers. As with the Fredericksburg project, the pumps would be added to an existing property. Venture stated that "[t]he existence of this station will allow for conversion of trucks from diesel to cleaner-burning CNG by providing the necessary support infrastructure, and will also improve air quality in the region" by lowering emissions. Id . Venture sought $784,844 to cover 40% of the project. "The bulk of the project costs are associated with the public portion of the station, with only $197,000 being needed for the private portion." Id . Grant money would be used for "purchasing and installing the CNG equipment as well as covering the additional costs associated with opening the facility to the public[.]" Id .

In October 2014, the CFA sent Venture two funding commitment letters approving grants in the amount of $643,389 and $547,047 for the two CNG stations. Each letter stated that "[t]he grant will be used by [Venture] for the construction of a CNG fueling station[.]" R.R. 19a, 26a. Venture and the Commonwealth thereafter executed the documents, each titled as an "Alternative and Clean Energy Grant Agreement," with the opening paragraph describing the document as a "[c]ontract entered into by and between the Commonwealth" and Venture. R.R. 33a, 73a. Each stated that the grant money was to be made available "as may be required by the Grantee [Venture] and authorized by the Grantor [Commonwealth], subject to the condition that it shall be used by the Grantee to carry out the activities described in the application submitted by the Grantee ... and which is incorporated herein by reference." Id .

Venture completed the two projects in 2017 and sought payment from the CFA. Executive Director Scott Dunkelberger⁴ denied the request via a letter stating that the agency was "unable to disburse the grant funds based on how [Venture] structured the construction and financing of the project," indicating that the "ACE funds were specifically awarded to pay construction costs incurred by [Venture]." R.R. 111a. Dunkelberger explained that because Venture "did not incur construction costs, instead electing to lease the CNG equipment/station[,] ... there are no eligible costs for the ACE grant to reimburse." Id . He noted that "[t]he application stated that the grant funds would be used to purchase equipment and pay construction costs, not to make lease payments." Id . Finally, the letter stated that the CFA declined reimbursement for a second and independent reason, namely that Venture failed to use a competitive bid process to select its own contractor, as required by the written agreements. Id.

Venture filed a statement of claim with the Board, a statutory body created to adjudicate certain contractual claims involving the Commonwealth. The Commonwealth filed preliminary objections alleging that the Commonwealth did not waive its sovereign immunity for "matters arising from grant contracts." Preliminary Objections, 02/15/2018, at 3. The Commonwealth averred that Venture failed to allege that the Board had jurisdiction and set forth its view that the Board has jurisdiction only when it is established pursuant to the Procurement Code (the "Code"), 62 Pa.C.S. §§ 101 - 2311. Id . ¶¶ 8-15. The Commonwealth argued that the Code limits the Board's jurisdiction in the present case pursuant to Section 102(f) :

§ 102. Application of part

* * *

(f) Application to grants .--This part does not apply to grants. For the purpose of this part, a grant is the furnishing of assistance by the Commonwealth or any person, whether financial or otherwise, to any person to support a program. The term does not include an award whose primary purpose is to procure construction for the grantor. Any contract resulting from such an award is not a grant but a procurement contract.

62 Pa.C.S. § 102(f).

The Commonwealth noted that "Venture correctly referred to the two contracts in question as ‘grants’ throughout its statement of claim." Preliminary Objections, 02/15/2018, ¶ 12. The Commonwealth briefly addressed the word "construction" in Section 102(f), observing that Section 103 defines that term to refer to "the process of building, altering, repairing, improving or demolishing any public structure or building or other public improvements of any kind to any public real property." 62 Pa.C.S. § 103. Additionally, the statute provides that the "term does not include the routine operation or maintenance of existing structures, buildings or real property." Id. Referencing the grant agreements at issue, the Commonwealth argued that "[n]either Contract A nor Contract B were [sic] awarded for the purpose of procuring construction for [the Commonwealth]." Preliminary Objections, 02/15/2018, ¶ 14. Venture responded that Section 102(f) "expressly includes within this Board's jurisdiction awards of grant money ‘whose primary purpose [was] to procure construction for the grantor[.]’ " R.R. 128a. Venture insists that the General Assembly "has waived sovereign immunity for claims arising from procurement contracts, like the contracts in this case." Id . ¶ 21.

The Board determined that there were outstanding questions of fact that were relevant to its jurisdiction and held an evidentiary hearing. Order, 3/20/2018, at 1. Following that hearing, the parties submitted proposed conclusions of fact and law, with each side elaborating on the foregoing points. The Board issued its conclusions and a supporting opinion. Factually, the Board determined that there was "no evidence that the [Commonwealth] and Venture had any communication after the grant documents were executed until the time that Venture completed the projects and sought payment[.]" Board's Final...